Urban Land Institute’s 2014 outlook: ‘recovering from the recovery’

Midwest, National
Friday, November 8, 2013
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ULI

At its annual fall meeting (this year in Chicago), the real estate research non-profit Urban Land Institute released its 2014 trends report Thursday. The verdict of the 1,000 professionals surveyed? Next year we will continue “recovering from the recovery,” in the words of one respondent, following the depths of the 2008 recession.

The Emerging Trends in Real Estate report (download the full report here) asked 1,000 individuals—mostly property investors and developers, but also banks, lenders and homebuilders—to forecast the coming year in the real estate industry. The report, ULI’s 35th annual, dubbed this coming year the first of the “middle innings” of the economic recovery.

Banks are again comfortable with real estate, ULI’s Stephen Blank said, having repaired balance sheets damaged by the financial collapse. There’s money to be made, the report said, in secondary markets (including many of the same cities we associate with the foreclosure crisis—Las Vegas, Atlanta, etc.). Secondary property types are also heating up, the report said, such as rentals of single-family homes.

Of the report’s “U.S. markets to watch” list, the top slots go to San Francisco, Houston, San Jose, New York City, and Dallas/Fort Worth. At the bottom of the list are Detroit, Providence, RI, and Cleveland.

But while some investors and lenders are loosening their grip on the purse strings, that doesn’t mean property owners are ready to sell. ULI’s Andrew Warren points out demand for warehouse and industrial spaces, for example, has soared, with more than 60 percent of survey respondents expressing interest. But fewer than 10 percent said they wanted to sell. Similar discrepancies exist in other sectors, which could drive prices over the next year. It seems despite the increasing momentum, property owners are still largely content to hold on to what they’ve got.

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